Russia’s VTB bank defies US sanctions on Iran with cross-border Iranian rials transfers

Russia’s VTB bank defies US sanctions on Iran with cross-border Iranian rials transfers
VTB is the first Russian bank to open Iranian floodgates in rial transfers / bne IntelliNews
By bne IntelIiNews December 19, 2022

VTB, the Kremlin’s second-largest bank, has announced it will launch cross-border bank transfers in Iranian rials, in direct contravention of US sanctions, Kommersant newspaper reported on December 19.

Retail and commercial account holders of VTB will be able to transfer amounts of up to $300,000 (RUB20mn) in an equivalent rial (IRR) amounts.

According to the bank, all transfers will pay a 1% commission at a minimum of RUB15,000 with funds credited to an Iranian bank account on the next business day.

“Cross-border transfers are available both in favour of individuals and legal entities in compliance with the requirements of currency legislation” the bank noted in its press release.

Customers will need to open a new Iranian rial account with VTB by purchasing currency from the bank via its mobile application. Transactions can also be done via depositing rials in VTB branches.

“We have become the first bank to implement international money transfers to Iran and, taking into account the strengthening of business ties, the growth of economic cooperation and the development of tourism, we expect that they will be in demand” the bank added.

VTB has past experience with dealing with bank transfers with Iran but was fined $9.5mn by the US for violating bank sanctions in 2014.

Earlier in November, the bank announced it was shutting down operations in London after a “100+ year history” in the City of London, according to its latest regulatory filing.

The London operation, which can trace its lineage back to Tsarist times via its Moscow Narodny subsidiary based near Cannon Street since the Revolution in 1917, has been a prestigious calling card for the Kremlin in the UK.

The US Department of the Treasury's Office of Foreign Assets Control penalised Bank of Moscow (a VTB subsidiary) for authorising 69 financial transfers, worth roughly $41mn, for a Russian subsidiary of Iran's Bank Melli between 2008 and 2009.